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The way companies handle complaints can mean the difference between success and failure in an
increasingly competitive marketplace. Businesses that turn
complaints into opportunities for building closer relationships
with customers are the ones that are most likely to survive and
prosper.

Opportunity to improve the company

The complaint is a signal that should not be ignored. When
customers complain, they are giving your company an opportunity to fix what is wrong and improve
your business. Why? Customers act in their own self-interest, and
they are in a unique position to tell your company the
unvarnished truth - something your employees are unlikely to do
because it might reflect negatively on their performance or they
may fear that you might “kill the messenger” rather than listen
to the message. Just about every comprehensive study done on this
subject points to greater success for companies that turn the
negatives represented by complaints into positives.

Ignore customers at your own peril

Back in the summer of 2011, Netflixignored their customers by splitting its DVD
and streaming businesses and effectively increasing prices by
40%. As a result, they lost a whopping 800,000 subscribers, their
stock price fell to less than half its previous value, and the
company became one of the 10 most hated companies in America.

Customer complaints are marketing opportunities

John Goodman did pioneering customer service
research through TARP, the company he founded in 1971. He
showed that, while customer service is typically a cost center in
most companies, it could be turned into a powerful marketing force to drive sales, repeat
business and greater profits. His research showed that roughly 4%
of customers (1 out of 26) that were “wronged” by a company
complain. The other 96% (25 out of 26) stop buying and tell 9 to
10 others within a week about their poor treatment. This means
that a negative word of mouth pyramid averaging 250 is created.

If the company is able to satisfactorily solve the problems of
the 4% that complain (turn the negative into a positive), they
will tell 6 to 7 others within a week that the company solved
their problem. This will result in a positive word of mouth
pyramid of 250 customers that say good things about the company.
The positive group will also develop a closer relationship with
the company.

What can you do about the other 96%? You can go through your
customer list and contact customers that have not bought products
from you in a while and ask them why you have not heard from
them. This will identify a good number of negatives that you can
turn into positives. And, in

cases where there were no negatives, the contact is another
opportunity to generate more business.

In their book, Turned On, Roger
Dow and Susan Cook describe the
Marriott research done to identify which guests
intended to stay at the Marriott again. They divided guest stays
into 3 groups A, B, and C.

A = Nothing bad happened during their stay.

B = Something bad happened, but Marriott fixed
the problem.

C = Something bad happened, but Marriott did
not fix the problem.

The percentage of these three groups that said they would return
to stay at the Marriott were as follows:

A = 89%

B = 94%

C = 69%

This corroborated the TARP studies that showed that a broken
relationship that is “fixed” creates a more loyal customer than
one that was never broken. The more a company is able to fix what
is wrong, the more they build a positive reputation.

Opinion Research did studies
that showed that when choosing between similar products, 87% of
customers choose the product from the company with the better
reputation.

How to Create a System to Handle Complaints

How can your company use this information to turn complaints into
a powerful marketing force that improves your business and
reputation?

Train all employees to look for complaints and view them as
opportunities to neutralize negatives and build stronger
relationships with customers.

Record the complaint so that it can be shared.

Send it to the decision maker with the authority to fix what
is wrong.

Make sure the responsible party fixes it as quickly as
possible.

Follow up with the customer to insure that they were
satisfied with the fix. If not, expedite a solution.

Give them a code to use when they purchase from you again or
refer others.

Track their repeat purchases and referrals.

Report statistics on repeat purchases and referrals stemming
from the fixed problem.

Calculate the ROI (return on investment) of the entire
process.

As good marketers know, complaints are opportunities to develop
closer relationships and improve your business. Don't sweep them
under the rug or ignore them. If you do, they will punish you.
Ask Netflix, Bank of America, or the many others that
ignored complaint signals.